Thank you for the question.
Clause 2 extends the superpriority for unremitted employee contributions and unpaid employer normal cost contributions owing to the pension plans to any unpaid special payments and unfunded pension liability. It also extends the superpriority for unremitted employee contributions and unpaid employer normal cost contributions owing to the pension plans to any unpaid special payments and unfunded pension liability.
As noted, this essentially creates a superpriority that would place unfunded pension liabilities and unremitted pension contributions.... It's worth noting that unremitted pension contributions—actually those contributions that would have been subject to a payroll contemplation in the lead-up to an insolvency—already have a superpriority. The major piece here is the extension of the superpriority to the overall, including unfunded, pension liability. This includes, in the federal case, those special payments that were required to be made over the subsequent five years to make up for the gap.
What that essentially does is place them above preferred claims in the case of a restructuring. It also places them above unsecured and secured creditors in the case of a restructuring. In many cases, this would essentially mean that the unfunded pension liability would take precedence, potentially leaving significantly less available in the estate for the purposes of secured and unsecured creditors.
In this case, because it's a superpriority, thereby meaning it's an automatic.... For the case of restructuring, this may mean that the unfunded pension liability is such that the assets remaining are simply insufficiently interesting or won't allow for a restructuring to occur. This would mean that the entity would proceed into liquidation and people would be paid on a pro rata basis. We would essentially be prioritizing the unsecured claim of unfunded pension liabilities above those of other unsecured creditors, which can include small and medium-sized enterprises, other suppliers and other providers of services and assets to the now liquidated entity.
In the case of clause 2, this is with respect to BIA liquidations. In a liquidation, this would essentially prioritize and provide that superpriority for the unfunded pension liability.
As discussed, we [Technical difficulty—Editor] impact on the cost of credit and the availability of the entity to proceed through restructuring, and then, should they be in a position to continue, to potentially allow them to access the necessary liquidity to do so.